Nokia Corp has increased its third-quarter sales forecast to a range of E8.4bn to E8.5bn ($10.3bn to $10.4bn) as a result of higher-than-expected sales of mobile handsets and firmer prices.
This is well above its previous guidance of E7.9bn to E8.2bn ($9.7bn to $10bn). The company said it is taking market share from its rivals, and predicted that its handset sales will grow faster than the overall market.
With higher sales and what the company describes as good cost control, it said earnings per share for the third quarter to September 30 will be in the range of E0.18 to E0.19 ($0.22 to $0.23), compared with its previous forecast of E0.14 to E0.17 ($0.17 to $0.21). Its earnings per share estimate includes a contribution of E0.01 ($0.01), or slightly higher, from the sale on non-core units. It said the underlying business performance of its Networks business group is anticipated to be largely in line with forecasts.
The biggest area of growth in the handset business has been in developing countries where selling prices are lower. When it released its second-quarter figures, Nokia said that while it expected the overall mobile device market in 2005 to grow in value, as the proportion of lower-priced entry-level phones continued to increase, industry average selling prices were expected to trend down for the remainder of the year.
But CFO Rick Simonson said that a slight shift in mobile phone sales to Europe and away from Latin America helped stem the reduction in average selling prices during the third quarter. Gross margins are still on track to fall, though he said that it had fallen a little less than what we had predicted.
The company has not changed its forecast that overall mobile device sales this year will reach about 760 million units, up from an estimated 643 million units in 2004.